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Ramalingam

Ramalingam Kalirajan  |5092 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 26, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
Samir Question by Samir on Sep 14, 2023Hindi
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i have mutual fund portfolio of about 90 lakh. i want to consolidate these to a few schemes, for which i need your suggestion. I am 60 and retired and am looking for 1.5 lakh per month return for next 25 years. Possible?

Ans: Optimizing Mutual Fund Portfolio for Retirement Income

As a Certified Financial Planner, I appreciate your proactive approach to consolidating your mutual fund portfolio to achieve your retirement income goals. Let's explore potential strategies to optimize your portfolio for sustainable returns over the next 25 years.

Understanding Retirement Income Needs

Retirement planning involves assessing your income requirements and ensuring your investment portfolio generates sufficient cash flow to sustain your lifestyle throughout your retirement years. With a target of Rs. 1.5 lakh per month for the next 25 years, it's essential to construct a robust portfolio capable of meeting this income goal while accounting for inflation and market volatility.

Consolidating Mutual Fund Holdings

Consolidating your mutual fund holdings simplifies portfolio management, reduces administrative complexity, and enhances overall efficiency. By streamlining your investments into a few carefully selected schemes, you can gain better visibility and control over your portfolio. Your Certified Financial Planner (CFP) can help identify redundant or underperforming funds and recommend suitable alternatives aligned with your retirement objectives.

Creating a Retirement Income Strategy

To generate a consistent monthly income of Rs. 1.5 lakh over the next 25 years, consider the following strategies:

Dividend-Yielding Equity Funds: Invest in dividend-yielding equity funds with a track record of stable returns and regular income distributions. These funds provide a source of passive income while offering the potential for capital appreciation over the long term.

Debt Funds for Stability: Allocate a portion of your portfolio to debt funds to provide stability and mitigate downside risk. Opt for high-quality debt instruments with relatively low volatility, such as government bonds and corporate debt securities. Your CFP can recommend suitable debt funds based on your risk tolerance and investment horizon.

Systematic Withdrawal Plans (SWPs): Implement SWPs to systematically withdraw a fixed amount from your mutual fund investments at regular intervals, thereby generating a steady stream of income. SWPs allow you to tailor your cash flow requirements according to your retirement income needs while preserving the principal amount.

Mitigating Risks and Ensuring Long-Term Sustainability

While aiming for a monthly income of Rs. 1.5 lakh, it's essential to adopt risk management strategies to safeguard your retirement corpus and ensure its long-term sustainability:

Diversification: Maintain a well-diversified portfolio across asset classes, sectors, and investment styles to reduce concentration risk and enhance resilience against market fluctuations.

Regular Portfolio Reviews: Periodically review your portfolio with your CFP to assess performance, rebalance asset allocations, and make necessary adjustments in response to changing market conditions or life events.

Monitoring Inflation: Factor in the impact of inflation on your retirement income needs and adjust your withdrawal rate accordingly to preserve purchasing power over time.

Conclusion

In conclusion, by consolidating your mutual fund portfolio and adopting a structured retirement income strategy, you can work towards achieving your goal of generating a monthly income of Rs. 1.5 lakh over the next 25 years. With the guidance of a Certified Financial Planner, you can navigate market uncertainties and build a resilient investment portfolio tailored to your retirement objectives.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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I started investing in mutual fund back in 2006 with very small SIP amounts and I am 41 now. Currently, I have a MF corpus of approx 30 lakh, with SIP investments in following schemes, though i myself feel i have invested in multiple fund houses or similar portfolios and need your help or guidance with consolidation and then keep a target of 2.5 to 3 crore in next 15 years through Mutual fund only. Currently I am investing 32500 per month through SIPs only. Sr No Fund Name Start Date Amount 1 HDFC Top 100 Fund Growth 20-Sep-06 1000 2 HDFC Top 100 Fund Growth 05-Dec-13 1000 3 SBI BlueChip Fund Regular Growth 25-Apr-16 1000 4 ICICI Prudential Value Discovery Fund Growth 22-Jul-16 1000 5 Kotak Flexicap Fund Growth 23-Aug-17 1000 6 IDBI India Top 100 Equity Regular Fund Growth 05-Jan-18 1000 7 L&T Hybrid Equity Fund Growth 06-Dec-18 1000 8 L&T Hybrid Equity Fund Growth 07-Jan-19 1000 9 Indiabulls Equity Hybrid Fund Regular Growth 12-Mar-19 1000 10 HDFC Mid-Cap Opportunities Regular Fund Growth 01-Jul-19 1500 11 SBI Magnum MidCap Regular Fund Growth 01-Jul-19 1000 12 ICICI Prudential Bluechip Direct Fund Growth 01-Jul-19 1000 13 HDFC Top 100 Fund Growth 27-Oct-19 1000 14 HDFC Hybrid Equity Fund Growth 27-Oct-19 1000 15 Axis Midcap Fund Direct Plan Growth 16-Dec-20 1000 16 Canara Robeco Equity Hybrid Fund Direct Plan Growth 17-Dec-20 1000 17 SBI Magnum Global Fund Direct Growth 17-Apr-21 1000 18 HDFC Flexi Cap Fund Direct Plan-Growth 17-Apr-21 1000 19 Motilal Oswal Focused 25 Direct Growth 17-Apr-21 1000 20 HDFC Flexi Cap Fund -Direct Plan - Growth Option 17-Apr-21 1000 21 SBI Flexicap Fund Direct Growth 17-Apr-21 1000 22 Motilal Oswal Flexi Cap Fund Direct Plan Growth 24-Jun-21 1000 23 Tata Quant Fund Direct Fund 30-Jun-21 500 24 Aditya Birla Sun Life India Gennext Fund Direct Plan Growth 01-Jul-21 1000 25 ICICI Prudential FlexiCap Fund Direct Growth 05-Jul-21 500 26 Mirae Asset Large Cap Fund Direct Plan Growth 01-Sep-21 1000 27 IDFC Corporate Bond Fund Direct Plan Growth 22-Sep-21 1000 28 ICICI Prudential NASDAQ 100 Index Fund Direct 27-Oct-21 1000 29 HDFC Corporate Bond Fund -Direct Plan - Growth Option 09-Dec-21 1000 30 Aditya Birla Sun Life Corporate Bond Fund Direct Plan Growth 09-Dec-21 1000 31 TATA Digital India Fund Direct Growth 25-Dec-21 1000 32 Parag Parikh Flexi Cap Direct Growth 25-Dec-21 1000 33 Kotak Gilt-Investment Fund Provident Fund and Trust-Growth Direct 28-Dec-21 1000
Ans: The funds that can be continued are 15, 16, 26, 27, 28, 29, 30, 32 and 33; 27, 29, 30, and 33 being debt funds and 15, 16, 28 and 32 being equity funds.

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Ramalingam

Ramalingam Kalirajan  |5092 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 24, 2024

Asked by Anonymous - Oct 11, 2023Hindi
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i have a mutual fund port folio of appx 1 cr in large number of schemes invested over 30 years of my career. I am 60 now and retired. i wish to receive 1.5 lakh per month out of my investments. probably consolidate in few schemes, it is possible to achieve this figure? If not, I can add a few lakh from my share portfolio to achieve this return. Also let me know, MF which schemes i should consolidate my investment of 1 cr to get 1.5 lakh per month return?
Ans: Firstly, congratulations on building a substantial mutual fund portfolio over the span of your career. Your disciplined approach towards investing has certainly paid off.

Given your goal to generate 1.5 lakhs per month from your investments, it's essential to strike a balance between growth and income-oriented schemes. With a portfolio of 1 cr, achieving a monthly income of 1.5 lakhs might be challenging without dipping into the principal amount, especially considering the current market conditions and interest rates.

To achieve your desired income, you might need to consider a combination of mutual funds that focus on both growth and dividends. However, relying solely on dividends might not be sustainable, as it could impact the growth of your principal amount over time.

Considering consolidating your portfolio into fewer schemes could make it easier to manage and monitor. Look for well-established funds with a consistent track record of delivering returns and consider diversifying across asset classes to manage risks.

It might also be beneficial to consult with a Certified Financial Planner to develop a customized withdrawal strategy that aligns with your financial goals and risk tolerance.

Remember, investing is a journey, not a destination. Regular reviews and adjustments to your portfolio will be crucial as you transition into retirement.

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Ramalingam

Ramalingam Kalirajan  |5092 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jun 25, 2024

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Dear sir I have invested in 21 different mutual funds scheme . In few through SIP and others in lump sum. The schemes are- (1) Adity Birla Sunlife Digital India (2) Adity Birla Sunlife Flexicap Fund (3) Axis ELSS Tax Saver Fund (4) Canara Robeco Bluechip Equity fund (5) HDFC Tax Saver -Regular Plan (6) ICICI Prudential Bluechip Fund (7) ICICI Prudential Commodities Fund (8) ICICI Prudential Long Term Equity - Tax Saving Fund (9) IDFC Dynamic Equity Fund (10) IDFC Sterling Value Fund (11) Kotal Emerging Equity Scheme (12) Kotak Multicap Fund (13) Kotak Small Cap Fund (14) Mirae Asset ELSS Tax Saver Fund (15) Nippon India Balanced Advantage Fund (16) Nippon India Tax Saver – ELSS Fund (17)Nippon India Value Fund (18) Parag Parikh Flexicap Fund (19) PGIM India Flexicap fund (20) PGIM India Midcap Opportunities Fund (21) Sundram Select Midcap- Regular Plan . I want to reduce number of schemes in my portfolio. Kindly suggest me 5-6 good schemes where I can switch . Thanks
Ans: Firstly, congratulations on diversifying your investments across various mutual funds. You’ve made a commendable effort to invest systematically, both through SIPs and lump sum. Your commitment to securing your financial future is truly impressive.

However, managing 21 different mutual funds can be overwhelming and counterproductive. It may lead to over-diversification, reducing the impact of potential gains and increasing complexity. Let’s explore how you can consolidate your portfolio into 5-6 high-quality schemes while maintaining a balanced and effective investment strategy.

Assessing Your Investment Objectives
Before streamlining your portfolio, let’s understand your investment goals. These goals could include:

Long-Term Growth:

Building wealth over a long period, focusing on high-growth potential.
Tax Saving:

Reducing tax liability while investing, typically through ELSS funds.
Balanced Approach:

Combining stability and growth through a mix of equity and debt.
Sectoral Exposure:

Investing in specific sectors to leverage industry-specific growth.
Capital Preservation:

Minimizing risk and preserving capital while generating modest returns.
Each of your existing funds might align with one or more of these objectives. It’s essential to retain funds that best fit your primary goals.

Understanding Over-Diversification
Having too many funds can dilute the benefits of diversification. Here’s why over-diversification may not be beneficial:

Redundancy:

Multiple funds may hold similar stocks, leading to overlapping portfolios and reduced diversification benefits.
Complex Management:

Tracking and managing numerous funds is time-consuming and can complicate performance evaluation.
Diminished Returns:

Spreading investments too thin can lead to average performance, as high-performing funds’ impact gets diluted.
To avoid these issues, it’s wise to focus on a select few, well-performing funds that align with your investment strategy.

Categorizing Your Existing Funds
Let’s categorize your 21 funds based on their types and focus areas. This will help in identifying redundancy and areas to consolidate.

Equity Funds:

Focus on growth through investments in stocks.
Debt and Balanced Funds:

Aim for stability and regular income by investing in a mix of equity and debt.
Tax-Saving Funds (ELSS):

Provide tax benefits under Section 80C along with growth potential.
Sectoral and Thematic Funds:

Invest in specific sectors or themes to leverage industry growth.
Identifying Redundant Funds
By comparing funds within each category, we can pinpoint overlapping investments. Here’s how we categorize your existing funds:

Equity Funds:

Aditya Birla Sun Life Flexicap Fund, Canara Robeco Bluechip Equity Fund, ICICI Prudential Bluechip Fund, IDFC Sterling Value Fund, Kotak Multicap Fund, Kotak Small Cap Fund, Parag Parikh Flexicap Fund, PGIM India Flexicap Fund, PGIM India Midcap Opportunities Fund, Sundaram Select Midcap - Regular Plan.
Balanced and Debt Funds:

Nippon India Balanced Advantage Fund, IDFC Dynamic Equity Fund.
Tax-Saving Funds (ELSS):

Axis ELSS Tax Saver Fund, HDFC Tax Saver - Regular Plan, ICICI Prudential Long Term Equity - Tax Saving Fund, Mirae Asset ELSS Tax Saver Fund, Nippon India Tax Saver - ELSS Fund.
Sectoral/Thematic Funds:

Aditya Birla Sun Life Digital India Fund, ICICI Prudential Commodities Fund, Nippon India Value Fund, Kotak Emerging Equity Scheme.
Selecting 5-6 Core Funds
To streamline your portfolio, choose funds that offer:

Diversification Across Market Caps:

Include large-cap, mid-cap, and small-cap exposure.
Sectoral and Geographical Diversification:

Ensure a mix of sectors and international exposure, if possible.
Balanced Risk and Return:

A combination of high growth and stable funds.
Based on these criteria, here’s a selection process for your core portfolio:

Equity Funds
Large-Cap Fund:

Choose a fund focusing on blue-chip companies for stability and consistent growth.
Flexi-Cap Fund:

Opt for a fund that invests across market caps based on opportunities.
Mid/Small Cap Fund:

Select a fund focusing on mid or small-cap stocks for higher growth potential.
Balanced Fund
Balanced Advantage Fund:
Retain a fund that adjusts the equity-debt mix dynamically based on market conditions for balanced risk and return.
Tax-Saving Fund (ELSS)
ELSS Fund:
Pick one ELSS fund that offers good historical performance and tax benefits.
Recommendations for Core Funds
Based on your existing investments and the criteria above, here are 5-6 funds to consider:

Large-Cap Fund:

ICICI Prudential Bluechip Fund: Offers exposure to large-cap companies, providing stability and steady growth.
Flexi-Cap Fund:

Kotak Flexi Cap Fund: Provides diversification across large, mid, and small-cap stocks, capturing market opportunities.
Mid/Small Cap Fund:

PGIM India Midcap Opportunities Fund: Focuses on mid-cap stocks with strong growth potential.
Balanced Advantage Fund:

Nippon India Balanced Advantage Fund: Balances risk and reward by adjusting equity-debt allocation dynamically.
ELSS Fund:

Mirae Asset Tax Saver Fund: Provides tax-saving benefits along with potential long-term growth.
Implementing the Switch
To transition smoothly:

Evaluate Performance:

Compare the past performance, risk metrics, and portfolio holdings of the selected funds.
Check Fund Objectives:

Ensure the new funds align with your financial goals and risk tolerance.
Plan the Switch:

Gradually switch your existing investments into the chosen core funds. Avoid large, sudden shifts to mitigate market timing risks.
Monitor and Adjust:

Regularly review your consolidated portfolio. Make adjustments as needed based on performance and changing goals.
Ensuring a Balanced Portfolio
After consolidating your portfolio, maintain a balanced approach:

Diversify Within the Funds:

Each selected fund should have a well-diversified portfolio across sectors and stocks.
Align with Goals:

Ensure your investments are aligned with your long-term goals, risk appetite, and financial plan.
Stay Informed:

Keep yourself updated on market trends and fund performance. This helps in making informed decisions.
Managing Risks and Returns
While reducing the number of schemes simplifies your portfolio, it’s essential to manage risks effectively:

Avoid Over-Concentration:

Ensure no single stock or sector dominates your portfolio.
Assess Risk Levels:

Consider the risk levels of each fund and how they fit into your overall risk tolerance.
Balance Growth and Stability:

Include funds that provide both growth and stability to cushion against market volatility.
Planning for the Long-Term
To ensure your investment strategy supports your long-term goals:

Focus on Consistency:

Choose funds with a consistent track record of performance across different market cycles.
Reinvest Dividends:

Opt for growth options to benefit from compounding returns over the long term.
Review Periodically:

Regularly review and rebalance your portfolio to stay aligned with your financial objectives.
Final Insights
Streamlining your mutual fund portfolio from 21 schemes to a focused selection is a wise move. Here’s a summary of your next steps:

Consolidate Smartly:

Choose a balanced mix of funds that provide diversification and align with your goals. Opt for stability in large-cap, growth in mid/small-cap, and balanced exposure.
Simplify Management:

Reducing the number of funds makes it easier to track performance, manage investments, and achieve desired outcomes.
Monitor Regularly:

Keep an eye on your consolidated portfolio. Adjust as needed to ensure it meets your long-term financial goals.
Seek Professional Advice:

If needed, consult a Certified Financial Planner to refine your strategy and ensure optimal fund selection.
By focusing on a streamlined, high-quality portfolio, you position yourself for better returns, easier management, and more peace of mind.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Career Counsellor - Answered on Jul 21, 2024

Asked by Anonymous - Jul 20, 2024Hindi
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Sir, i have completed my bachelors (BCA) in India in an engineering college and wishes to pursue my masters in a foreign country.My family is'nt well off so iam looking into schlorships.can you suggest some courses with good scope. Also which countries are best for IT field that provide great schlorship oppurtunities.
Ans: As far as Scholarships for Abroad Universities are concerned, you should have good scores from the entrance tests (whichever will be applicable according to the University's admission criteria), good past academic records, your extra and co-curricular activities, additional certifications, your Statement of Purpose (SOP), Letter of Recommendation etc. Those who have gained work experience of a minimum 2-3 years after graduation get preference in admission.

And most of the Universities do not provide 100% scholarships. You will have to bear some expenses (depends upon which University / College you get admission into & what all expenses only it will cover?) .

As you have mentioned that your parents NOT well-off financially, it is suggested to work for 2-3 years, earn some money and also gain work experience, then go for further education abroad.

Before approaching any Professional Abroad Education Consultant, do a thorough research about the Countries/Universities/Programs, shortlist those which you think will be most suitable, apply to 5-6 top Univerities offering Scholarships and finalize one best University/College for you.

All the BEST for Your Bright Future.

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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